Have you heard the term General Liability Insurance? What about Professional Liability? Ever wonder what the difference is between the two? When starting and owning a business it is very important to know the types of insurance coverage that you need. One of the first insurance policies to consider is general liability vs. professional liability insurance. Understanding the differences between these two types of policies can be the difference of staying afloat. In this post, we’ll explore the differences between the two so you can make an informed decision on the right coverage for your needs.
Difference Between General Liability and Professional Liability
To understand the difference between these two types of liability coverage you have to understand what each covers. General liability will cover you in case of accidents and incidents. For example, if someone slips and falls on your property and they sue you as a result. General Liability insurance will help pay for their medical bills and any other costs associated with the incident. Professional Liability Insurance protects against legal claims made against professionals such as doctors, lawyers and accountants who provide services under their license or certification. For example, an accounting firm mistakenly sets up a clients investment business as a corporation instead of a partnership. The client then sued the accountant alleging losses for tax liability. This is where professional liability insurance would step in.
General Liability Insurance
General liability insurance is the most basic and essential form of business insurance. It covers bodily injury, property damage and personal injury claims resulting from negligence on your part. This can include:
- Claims for injuries sustained by employees or customers at your facility or events you sponsor.
- Claims related to product liability (e.g., if someone buys a defective product from you).
- Claims related to unsafe conditions on the premises of your business or at an event that you sponsor (e.g., slipping on wet floors).
- Advertising Errors
What is the average cost of General liability?
For startup or small businesses general liability costs between $42 to $92 per month / $400 to $750 per year. The cost is well worth the protection. Some variables that can affect how much you pay are:
- Type of business
- Years of experience
To learn more about your business’ specific general liability insurance needs, get a general liability quote.
Professional Liability Insurance
Professional liability insurance is a type of general liability insurance that covers the cost of defending a business in court. It’s necessary for businesses that provide services to the public, like doctors and lawyers. Professional liability insurance can be used to cover legal fees, settlements, and judgments against you if someone files a lawsuit alleging negligence or malpractice. Other industries also have similar needs for this type of coverage, for example:
- Construction companies who hire subcontractors
- Web Developers
The list goes on. If you are not sure if your business will benefit from professional liability insurance. Work with an independent insurance broker to get the best advice for your particular business and situation.
What is the average cost of professional liability?
A rough estimate of the yearly cost for small businesses for professional liability insurance is between $500 to $2000 yearly. This range is pretty broad because there are variables when it comes to these policies such as:
- Industry/ Type of business
- Years in business
- Claims history
- Policy coverage limits
When you start a business, you should consider getting both a general liability and professional liability policy to best be protected.
As you can see, it’s important that you do your own research and figure out the coverage you really need. And when putting together your business plan, don’t forget that insurance policies are just one part of your overall risk management strategy.